Due Week 10, Day 7 (225 points)
The specific course learning outcomes associated with this assignment are:
• Determine how capital budgeting is used in long-term financial decisions.
• Apply management accounting concepts to identify and process relevant financial
information for decision-making purposes.
• Use technology and information resources to research issues in financial reporting and
• Write clearly and concisely about financial reporting and analysis using proper writing
Sophie Morgan, President of Cayuga Cookies, Inc. (CCI), was trying to decide whether to expand
the company by adding a new product line. The proposal seemed likely to be profitable and
adequate funds to finance it could be obtained from outside investors.
CCI had long been regarded as a well-managed company. It had succeeded in keeping its
present product lines up to date and had maintained a small but profitable position in a highly
The amount of capital presently employed by the company was approximately $4,000,000, and